Let me begin by going through a brief introduction of where we are coming from. It is no longer news that Ajaokuta Steel Plant’s construction and erection works began in 1979. It was initially scheduled for completion in 1986 but the progress tottered for a while, until it came to a halt in 1994, by which time it was estimated to be at 98% completion stage. That means 98% of the project’s steel structures and main equipment had been supplied and erected.
An explanation of this is important because many people are not aware what this 98% often referred to as the completion stage actually mean. It is referring to the supply, erection, testing and commissioning by the Main Contractor of the Steel Structures and Main Equipment of the Steel Plant expressed as a percentage by weight, of the total project requirement.
It does not mean that the Plant is ready at that level of completion because it takes more than 100% completion of the Plant to make Ajaokuta work.
The mandatory Performance Guarantee Tests, that need to be done by the erectors at the end of the project, can only be done when the relevant infrastructure for the supply of raw materials and evacuation of products for sustainable production are in place.
As we speak, even the road from the nearest town, Okene, through which most of the materials, the steel structures and the equipment came to site here in Ajaokuta, is in a very bad state.
The other time I was discussing with a member of staff of Ajaokuta Steel Company, who is even a very junior person, but his input touched me very greatly. He said, “Let all talk go on at every level about Ajaokuta, but until the day I see that road restored to the state it used to be, in the early 80s, when the plant was erected, will I take government serious”.
Most of us are probably aware that of all the raw materials required for steel production in Ajaokuta, the coking coal has to be sourced abroad and imported. The volume in tons per annum is considerable. For this reason, the original plan was to develop the Onne Port in Rivers State and the rail link to Ajaokuta via Oturkpo in Benue State.
For this purpose, a rail bridge over the Niger with Ajaokuta at one side to link the Eastern Line at Oturkpo was built in the early 80s.
The project has since been abandoned. If you want to do sustainable production of iron and steel from Ajaokuta without that link to Onne Port, you have not started. I have not heard government make any serious move about this in a long while.
The talk now about the rail from Ajaokuta to Warri is good. However, it is cheap talk. The link to the Delta Steel Company Harbour and the Warri Port, which is yet to be done, will not help us. We cannot bring in coking coal in the quantity required at Ajaokuta Steel Plant through that avenue.
The plenitude of oil pipes crisscrossing the port area in Warri do not allow big ships, the kind that will serve us to come close to the port. So, you will be talking of multiple handling which will make the cost of delivery of the coal to be on the high side, and that willimpact on the products’ costs negatively. At this stage, anything that will impact on the costs should be looked at critically.
We do know that the Ajaokuta Steel Plant is a 1980 design. As at then, it was the most modern.
By now, it ought to have gone through levels of automation to upscale its efficiency and production capacity for our products to be competitive in the world market. This is equally critical, for the plant to operate at the level of its peers.
Well, going back to history, the Russian Contractor, TPE of Moscow, who was the main contractor for the Global Contract, and the Project Management and Technical Services Consultants, MECON of India were, for four years, between 1990 and 1994, asking questions without receiving answers, on the non-development of the relevant external infrastructures and local mines necessary for the delivery of raw materials to the Steel Plant.
They did this through their monthly Project Reports to the Management of ASCL and at direct meetings with others at the top. Those questions have largely not been answered at all to date.
Secondly, even as they worked, payment in respect of works already executed and certified for payment were in huge arrears. Thus they were frustrated and they left the Steel Plant site in 1994. The contract, as we all know, was eventually determined in 1996, two years later.
Four years later, going forward, Government indicated intention to revisit the Plant, and we were all hopeful, that was in the year 2000.
The first thing that was done was a Technical Audit, which was, as many experts agree, the best so far. It was conducted by Russians, about 40 of them in number, with Nigerian engineers. They were constituted into 23 teams to investigate and check different aspects of the Steel Plant. Over 200 Nigerian engineers were involved in that exercise, at the shop floor and in the mobile teams.
Their findings were encouraging. The Plant, which we all feared had deteriorated tremendously, was found to be in good condition. Similar audits, though not at the same level of intensity, were conducted in 2010 and 2018 variously by REPROM Nigeria Limited and the Nigerian Society of Engineers, respectively.
The subsequent reports indicate a small drop in the technical readiness of the Plant. Let me go back to explain that as at the time the Steel Plant was being built, progress of work on steel structures and equipment supply, erection and commissioning, was measured by weight and expressed as a percentage of the total weight of equipment and steel structures for the project. So, that we had 98% then meant that all the appurtenances for the installed equipment were in place too.
Today, due to loss through assets stripping, because each equipment that was supplied came with spares for at least two years operation, most of those spares have been lost. When we talk of assets stripping, it is principally about that. Basically, these are small drives, electric motors, the target for vandals. A good number of these have found their way out of the Plant through the activities of vandals. All these put together, perhaps is what informed the later audits to report about 3% decline in the technical readiness of the Steel Plant.
Armored cables have been cut into pieces here and there and lifted from the Plant amounting to several kilometers. And that is expensive.to replace.
As at today, you cannot say that a 1980 plant that has not been run integrally will be able to match a similar plant that has been in operation elsewhere. But we have to start from somewhere. There is always the big question. And that big question is, does Nigeria need a steel plant, the type we have here on ground? My answer is, yes. There is a second question. Supposing we do not already have a steel plant, and we have all these resources for iron and steel making in our country, can we advise that Ajaokuta be emplaced? My answer is also, yes.
You will agree with me that no matter the setbacks we have had up to this point, we are better than not having started at all. And we can make, and we do need to make progress.
Some of the units of the Plant that were completed have been operated beneficially at one time or the other between 1983 and 2009, especially the Wire Rod and the Light Section Mills. The Power and Utilities Facilities have largely been in constant operation over the years. Operation of the Wire Rod Mill and the Light Section Mills had to stop due to dearth of working capital.
This brings us to the question, what happened along the line? Because it has always been known that steel plant development is a capital intensive project, at the beginning it was thought fit to adopt the backward integration philosophy for the plant’s development, meaning that the primary units will be done last while the secondary and finishing end, including the auxiliary plants and engineering workshops are completed first. The idea in prosecuting the backward integration philosophy was to produce saleable items from the secondary plants and auxiliaries and generate funds that would be plowed back as part of the project development fund.
But as we all know, proceeds from the products was never returned to Ajaokuta, as planned.
Thus, the great issues before us now concern external infrastructure and funding.
There are plants older than Ajaokuta, some over 100 years, that have been operated consistently. What is done, to remain competitive, is to continue to address the automation level, and thereby reducing the manning level, increasing efficiency and reducing cost of production aside the routine maintenance checks and precautions.
Finally, I added during the Q&A session, among other responses not captured in the recording at my disposal, that Ajaokuta Steel Plant, as we have it today, must not and cannot be privatized. The reason being that it is as strategic as the nation’s military establishment on which we keep spending fortunes to keep whether the nation is at war or not.
ENGR. THOMAS OMEIZA OTU, MNSE, MNIM, FNMS
Engr. Tom OTU is a Corporate Member of the Nigerian Society of Engineers, a Full Member of the Nigerian Institute of Management and a Fellow of the Nigerian Metallurgical Society. He is a Past Chairman of the Nigerian Society of Engineers, Ajaokuta Branch. He has vast experience in Project Management and Technical Services, an experience garnered in the course of his 35 years of service with the Ajaokuta Steel Company between 1983 and 2018.
